However, this group is largely unaware that annuities can
provide this feature.

“While 75% of all consumers surveyed said they were familiar
with annuities, less than half understood an annuity can provide lifetime
income,” warns Cathy Weatherford, president and chief executive officer of IRI.
“This study is a critical step toward understanding how future generations plan
to save for retirement.”

The study was conducted jointly by Jackson National Life
Insurance Company and the IRI, showing more than 80% of advisers say that
guaranteed lifetime income product features have had a positive impact for
their clients. One-third say it is “the most impactful feature of annuities.”

“Further, a whopping 90% of all consumers who responded, and
95% of those 35 to 44 years old, are very or somewhat interested in receiving
lifetime income,” Weatherford notes. And yet the number of Americans actually
planning to purchase annuities remains
perplexingly low.

“This disconnect is devastating to American savers and the
advisers who are trying to serve the best interests of their clients,” observes
Barry Stowe, chairman and chief executive officer of the North American
Business Unit of Prudential plc, Jackson’s parent company. “Retirees need
guarantees to protect their lifetime income and our research proves people want
this benefit. It’s our job to educate Americans and ensure they know annuities
are designed to prevent consumers from outliving their income so they can live
the retirement they want.”

According to the firms, more than half of the financial professionals
surveyed believe at least some of their clients who do not own annuities will
run out of money during retirement.

“More strikingly, the study also found more than half of
advisers had clients who managed to completely exhaust their financial resources,”
Weatherford says. “Nearly one-third of the advisers have had this happen to
three or more clients. The primary factors cited by the advisers for this were
overspending and health
care costs.”

NEXT: What is
limiting the use of annuities?

According to the study, many advisers indicated there are
specific challenges that limit the use of annuities.

“Of advisers who responded, 61% believe negative client
perceptions of annuities present a barrier, and almost half of advisers say
their clients believe annuities are too expensive,” Stowe says. “Yet when advisers
described features of annuities in isolation—without referring to the products
by name—consumers expressed strong interest.”

Taking this lesson to heart, Emilio Pardo, chief marketing
and communications officer for Jackson, says it has become “more critical than
ever that our industry overcomes the existing bias toward annuities, simplifies
the language used to describe them and increases the overall understanding of
the power of a well-structured modern annuity so Americans will be more
receptive to using them to reach their financial goals.”

Other findings show younger
consumers tend to express greater interest in the income features annuities
provide compared to older respondents—yet older people tend to own more
annuities. Adding to the complexity, fully eight in 10 consumers say they “do
not believe Social Security alone will provide them with sufficient income in
retirement,” and only 21% of consumers “expect a pension to provide them with
significant retirement income.”

Weatherford concludes it is “particularly alarming that the
study found half of consumers plan to regularly withdraw money from their
retirement savings to cover basic and discretionary spending, an approach that
carries a high risk of depleting assets, especially among those who live
longer.”